Amazon Web Services CEO Adam Selipsky speaks at the AWS Reinvent conference in Las Vegas on November 30, 2021.
Noah Berger | Getty Images
Amazon reported on Thursday that revenue from its cloud segment rose 33% in the second quarter, beating analysts’ estimates.
Amazon Web Services generated $19.74 billion in revenue during the period, according to a statement. Analysts polled by StreetAccount had expected $19.56 billion. The growth rate slowed from nearly 37% in the previous quarter.
Amazon was left with $5.72 billion in operating revenue from AWS, up 36% year over year, but below StreetAccount’s consensus estimate of $6.04 billion. Yet it still plays a crucial role at Amazon, which reported $3.32 billion in total operating income. AWS’s operating margin shrank to 29% from 35.3% in the first quarter.
Although Amazon still relies on retail for the majority of its revenue, AWS is the company’s profit engine and provides a significant source of diversification as the economy slows and consumers cut back on spending. However, even areas of the high-tech market are seeing a shift in customer buying behavior.
Earlier this week, Alphabet and Microsoft both saw a slowdown in their cloud computing units. Both companies follow AWS, which controls roughly a 39% share. Microsoft reported a 40% rise in Azure revenue, while Google’s cloud sales rose 36% from a year earlier.
When asked on Tuesday what caused Alphabet’s Google cloud growth to slow, CEO Sundar Pichai said “you’re seeing a different mix of some customers being hit in terms of their ability to spend, some customers just taking a little longer and maybe in some cases they think about the time period they’re booking for, etc.”
At Microsoft, Azure cloud consumption growth slowed in the quarter. Chief Executive Satya Nadella told analysts on Tuesday that customers are “trying to make sure they can do more with less.” He said Microsoft is encouraging its marketers to make sure cloud bills go down.
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